Billionaire Leon Cooperman advised investors on Wednesday to stay away from bonds as they are in a bubble.
“My world is cash and stocks. I think bonds are the bubble, not stocks,” Cooperman told CNBC’s “Halftime Report.” He also noted investors should buy stocks they see as “fundamentally cheap” after a recent decline in equities.
Cooperman’s comments come after the benchmark 10-year note yield rose to 3.261 percent last week, its highest level since 2011. The sharp rise in rates spooked investors across the globe, with world equities falling sharply last week.
The Federal Reserve dropped its overnight interest rates to zero in the aftermath of the financial crisis as it tried to jumpstart the U.S. economy. This pushed yields down to historical lows, thus sending bond prices higher and to levels that some investors like Cooperman say reached bubble proportions. Now the Fed is reversing these policies by rising interest rates and trimming its balance sheet. The central bank has already hiked rates three times this year and is forecast to raise them once more before year-end.
Investors were worried that a rise in rates would lead to higher borrowing costs and thus slow down the global economy.
Cooperman, the CEO of Omega Advisors, said the market can handle higher interest rates, however, as there are no signs of a recession looming.
“The economy, if anything, is too strong,” Cooperman said. “The economy is on fire … The conditions that normally lead to a big decline just aren’t present.”
Cooperman’s comments come as U.S. stocks try to recover from a 4.1 percent decline last week amid worries about higher rates, tech valuations and fears of a global economic slowdown.Lamperti Milano Ankle Boot - Women Lamperti Milano Ankle Boots online on YOOX United Kingdom - 11496244QGIslo Isabella Lorusso Sneakers - Women Islo Isabella Lorusso Sneakers online on YOOX United Kingdom - 11393727PH , L' Autre Chose Boots - Women L' Autre Chose Boots online on YOOX United Kingdom - 11256376BLGianvito Rossi Ankle Boot - Women Gianvito Rossi Ankle Boots online on YOOX United Kingdom - 11473047QK , My Grey Loafers - Women My Grey Loafers online on YOOX United Kingdom - 11513935JK , ladies Golden Fashion Sneakers Price reduction , yo8SIaIl Men/Women Born Decker Oxfords valueShy By Arvid Yuki Sneakers - Women Shy By Arvid Yuki Sneakers online on YOOX United Kingdom - 11556676BA , Converse Black Patent Leather Chuck Taylor All Star SneakersNEW BALANCE U410bug-new Balance LOW-TOP TRAINERS FOR WOMEN , CUMBIA 30123 Negro WEDGE-HEEL SANDALS FOR WOMENAsics Blue/Deep Pink Womens Axis Running Sneakers , man/woman Dr. Scholl's Giorgie Flats Excellent workmanshipPedro Miralles High heeled sandals Colour: nero/blancoPOPA CALIFORNIA - Sandals Colour: new pink , men/women Naya Kicker Sandals online salemens/womens Nine West Openadoor Flats Brand , Dr. Martens 1460 Pascal Eastern ArtDsquared2 Sneakers - Men Dsquared2 Sneakers online on YOOX United Kingdom - 11564824OP , MOA - Master of Arts MIKEY PRINTED - Trainers - whiteFausto Puglisi Boots - Men Fausto Puglisi Boots online on YOOX United Kingdom - 11495452ANValleverde Loafers - Women Valleverde Loafers online on YOOX United Kingdom - 11465025TBGivenchy Sneakers - Women Givenchy Sneakers online on YOOX United Kingdom - 11117263DBEbarrito Ankle Boot - Women Ebarrito Ankle Boots online on YOOX United Kingdom - 11551848OAPrada Sport Sandals - Women Prada Sport Sandals online on YOOX United Kingdom - 11451891VVSteffen Schraut Loafers - Women Steffen Schraut Loafers online on YOOX United Kingdom - 11249747HJQuality and quantity guaranteed Jessica Simpson Lucina 4Cost-effective Rieker D8570 Emilia 70Every item described is available Hush Puppies Odell Slip-OnDingo Stacey The lovely look of the Dingo Stacey ankle boot will make you want to kick up your heels ,
But Cooperman thinks stocks will bounce back from this decline as they are fairly valued. He also noted the market can handle higher interest rates.
“My central view is the market will be higher than it is today at year-end,” he said. “We’re in a zone of fair value and it’s going to take a recession or a change in the Fed’s posture” to get us out of that.